Wiseguy Tickets operators admit online ticket hacking scheme

Amanda Brown/The Star-LedgerKristofer Kirsch, left, comes out of the federal courthouse in Newark with his attorney John P. McDonald. Kirsch and two others pleaded guilty to federal fraud charges today.

NEWARK — It was an audacious plan to corner the market on the hottest sports and concert tickets in the nation.

Springsteen. Bon Jovi. The Rose Bowl and the 2007 Major League playoffs at Yankee Stadium.

Using high-speed programs able to punch through security systems aimed at thwarting automated purchases, the operators of Wiseguy Tickets Inc. scored front-row seats to the best events, time after time.

Today, three men who set up the sophisticated network of computers that locked out legitimate fans and netted more than $25 million in profits pleaded guilty to federal fraud charges.

Kenneth Lowson, 41, and Kristofer Kirsch, 37, both of Los Angeles, admitted to a single count of conspiracy to commit wire fraud and exceed authorized access to computers engaged in interstate commerce. They face no more than two years in jail, fines of $250,000 and forfeiture of more than $1.2 million when they are sentenced in March.

Joel Stevenson, 37, of Alameda, Calif., pleaded guilty to a misdemeanor charge of exceeding authorized access to computers engaged in interstate commerce. He could get up to a year in jail and a $100,000 fine.

Lowson and Kirsch owned Wiseguys and directed all of the company’s operations. Stevenson was the company’s chief U.S.-based programmer.

Appearing before U.S. District Judge Katharine S. Hayden in Newark, the three admitted setting up a scheme that targeted on-line ticket operations including Ticketmaster, Telecharge, Tickets.com, MLB.com, MusicToday, LiveNation and other vendors.

Assistant U.S. Attorney Erez Liebermann told the court the company was able to outwit ticket vendor systems that restrict the number of tickets an individual customer is able to purchase.

Typically, a software technology known as CAPTCHA is used by ticket sellers, requiring would-be purchasers to read distorted images of letters, numbers and characters that appear on their computer screens and retype those images manually before tickets can be purchased. Those challenges are programmed so the images are recognizable to the human eye, but confusing to computers.

However, the three found a way around the electronic challenge with the help of a group of computer programmers in Bulgaria, creating pre-typed answer sets that entered thousands of code combinations within fractions of a second to gain access. One of them, Faisal Nahdi, fled to Indonesia and remains a fugitive.

According to prosecutors, Wiseguys also used a variety of ways to conceal what was going on. They established a nationwide network of computers that impersonated individual visitors to vendor websites. And they created hundreds of fake Internet domains, such as stupidcellphone.com, as well as thousands of e-mail addresses, to receive event tickets.

Prosecutors said the network gave them the ability to flood vendors’ computers at the exact moment event tickets went on sale — and order tickets faster than any human could. The tickets would be sold to other brokers at a mark-up over face value, then resold to the public at double or triple the original price.

Assistant U.S. Attorney Seth Kosto, in outlining the scheme in court, said Wiseguys was able to purchase more than a million tickets, which were sold for millions more in profit. In one case, involving a July 2008 concert featuring Bruce Springsteen and the E Street Band at Giants Stadium, Wiseguys purchased nearly half the 440 floor tickets closest to the stage that were available to the public.

Other events they were able to plug into included concerts by Hannah Montana, Bon Jovi, Barbara Streisand, Billy Joel and Kenny Chesney; Broadway productions of Wicked and The Producers; various sporting events, including the 2006 Rose Bowl, and tapings of the television show Dancing with the Stars.

Prosecutors said Wiseguys employees, in internal company reports, described their success at buying tickets as "straight domination." They celebrated "pigging out" on their acquisition of tickets for a January 2009 National Football League playoff game at Giants Stadium between the Philadelphia Eagles and the New York Giants, having "pigged out" on tickets.

The scheme came to light as authorities began investigating widespread complaints about rigged ticket sales, and ticket sellers and other sources pointed to Wiseguys as a major player.

Lowson’s attorney, Mark Rush, who had argued in pre-trial hearings that the business tactics were cutting edge, not criminal, said the marketplace had created a demand to be met.

"They sold tickets to a public that craves tickets," he said.

However, U.S. Attorney Paul Fishman said the three made money by combining "age-old fraud with new-age computer hacking."